Learn how to build a strong financial future by steering clear of these common traps.
Your 20s are exciting, new jobs, new freedom, and for many, your first taste of real income. But this decade also comes with financial challenges that can shape your future. It’s easy to overspend, avoid planning, or fall into debt when you’re just starting out.
The good news? Most money mistakes in your 20s are completely avoidable once you know what to look out for. In this article, you’ll discover the most common financial missteps and how to dodge them, so you can start building a healthy financial foundation.
1. Living Beyond Your Means
Mistake: Spending more than you earn
It’s tempting to match your lifestyle with your income (or worse, your friends’ lifestyles). But if you’re swiping your card or using “Buy Now, Pay Later” just to keep up, you’re setting yourself up for long-term debt.
What to Do Instead:
Create a simple monthly budget. Use the 50/30/20 rule:
- 50% for needs (rent, food, bills)
- 30% for wants (entertainment, shopping)
- 20% for savings and debt repayment
Example: If you earn ₱25,000 a month, try to keep your wants under ₱7,500 and save at least ₱5,000.
2. Not Saving for Emergencies
Mistake: Thinking you’re too young to need savings
Emergencies don’t wait for the “right age.” A job loss, phone repair, or hospital bill can throw your entire budget off if you’re unprepared.
What to Do Instead:
Start building an emergency fund aim for at least 3 months’ worth of expenses. Even saving ₱1,000 a month makes a difference over time.
Example: If your monthly expense is ₱15,000, build up to a ₱45,000 emergency fund gradually.
3. Relying Too Much on Loan Apps or Credit
Mistake: Using online loans or credit cards like free money
While loan apps and credit cards can help in real emergencies, using them regularly for shopping or dining can lead to debt traps and high interest rates.
What to Do Instead:
Use credit only when necessary and pay off your balance in full every month. Track your usage and understand the interest rate before borrowing.
Tip: Avoid apps that charge more than 36% annual interest that’s a red flag.
4. Not Investing Early
Mistake: Thinking investing is only for people in their 30s or 40s
Time is your best friend when it comes to growing wealth. The earlier you invest, the more you’ll earn thanks to compound interest.
What to Do Instead:
Start small. Explore beginner-friendly options like mutual funds, or stock investing apps.
Example: Investing ₱1,000 a month starting at 25 could grow to over ₱1 million by retirement, depending on the returns.
5. Skipping Financial Education
Mistake: Not learning about money management
If you’re avoiding terms like “budgeting,” “APR,” or “compound interest,” you’re missing out on opportunities to grow financially.
What to Do Instead:
Follow financial blogs, watch personal finance YouTube channels, or listen to podcasts. Understanding basic money principles helps you make smarter decisions.
Recommended Topics to Learn:
- Budgeting strategies
- Understanding loan terms
- Saving vs investing
- Avoiding scams and fraud
6. Not Setting Financial Goals
Mistake: Living paycheck to paycheck with no direction
Without goals, you’re more likely to waste money and feel stuck financially.
What to Do Instead:
Set short-term, mid-term, and long-term goals.
- Short-term: Save ₱10,000 in 3 months
- Mid-term: Pay off loan app debt in 6 months
- Long-term: Save for a car or business capital
Write them down and review them monthly.
Your 20s are the best time to build healthy money habits that will serve you for decades. While it’s okay to make small mistakes (we all do!), knowing what to avoid can save you from bigger financial problems later on.
Start today and tracking your spending, set realistic goals, and take control of your financial journey.
